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On 16 December 2025, the European Parliament adopted a significantly streamlined version of the Corporate Sustainability Reporting Directive. This represents a very significant recalibration of the EU’s sustainability reporting regime.
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On 16 December 2025, the European Parliament adopted a
significantly streamlined version of the Corporate Sustainability
Reporting Directive (“CSRD”). This represents a very
significant recalibration of the EU’s sustainability reporting
regime.
CSRD’s evolution
The CSRD represents the EU’s flagship framework for
mandatory sustainability reporting. Originally designed to apply to
a broad range of EU and non‑EU companies on a phased basis
from 2025, CSRD requires in‑scope entities to report in
accordance with the European Sustainability Reporting Standards
(“ESRS”) and to apply the
“double‑materiality” test. This test requires
companies to assess both financial materiality, how sustainability
matters affect the company and impact materiality, and how the
company affects people and the environment. The reporting
requirements spans governance, strategy,
impacts/risks/opportunities and metrics/tarobtains, extfinishs across the
value chain, and is subject to limited assurance.
In February 2025, the European Commission launched its
“Omnibus” initiative as part of a wider simplification
agfinisha intfinished to reduce reporting burdens for companies. The
Omnibus put forward by the European Commission contained a
substantial scaling‑back of CSRD, triggering nereceivediating
positions to be found by the Council of European Union and the
European Parliament. Trilogue nereceivediations between the European
Commission, the Council of the European Union and the European
Parliament proceeded at pace throughout the finish of 2025.
Now, on 16 December 2025, the European Parliament has voted
through the revised CSRD.
Key features of the revamped CSRD
- EU company scope: Under the amfinished CSRD, EU
companies fall within scope only if they exceed EUR 450 million net
turnover and have 1,000 employees at the entity or
consolidated level. This marks a very significant narrowing from
the original framework and is expected to reduce the number of
mandatory reporters by at least 80%. - Non‑EU company scope: Non‑EU
parent groups must report where their EU net turnover exceeds EUR
450 million, and they have an EU subsidiary or branch generating at
least EUR 200 million turnover. In‑scope non‑EU groups
must prepare a sustainability report at the group level. - Application timelines: Member States may
exempt companies that fall below the new scope thresholds from
reporting obligations for financial years 2025 and 2026. The
revised scope will apply in full from financial year 2027. - Revised ESRS: A new, simplified set of ESRS
must be adopted within six months of the
CSRD’s entest into force. The revised standards are expected to
reduce datapoints, prioritise quantitative disclosures, clarify
materiality expectations and enhance interoperability with other
global frameworks. - Value‑chain disclosures: The revised
framework introduces “value‑chain caps” that limit
the information companies may require from value‑chain
entities with fewer than 1,000 employees. Companies will retain a
three‑year transition period during which estimates may be
utilized where complete information cannot be obtained. - Assurance and implementation support:
Limited‑assurance requirements remain in place, with EU
assurance standards due by 1 July 2027. A new EU sustainability
reporting portal will also be established to support
implementation. Reporting thresholds will be subject to periodic
adjustment for inflation.
What This Means in Practice
Overall, the amfinished CSRD significantly reduces the number of
companies subject to mandatory EU sustainability reporting.
Companies currently preparing for CSRD should reassess their
potential in‑scope status under the new thresholds, monitor
Member State implementation decisions for the 2025–2026
exemptions and prepare for the revised ESRS expected in
mid‑2026.
CSRD Agreed: A Major Recalibration Of The EU
Sustainability Reporting Regime
The content of this article is intfinished to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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